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U.S. investors are still celebrating the stock market's all-time high, set Thursday in a holiday-shortened week. After several failed attempts in previous weeks, the broader Standard & Poor's 500 index confirmed the move into record territory made weeks ago by the more narrow Dow Jones Industrial Average.

Last week's ups and downs in Cyprus, just the latest chapter of the continuing saga of Europe's sovereign-debt and banking woes, weren't enough to derail the market. The S&P 500 took longer than the Dow to reach a new high because the technology stock sector, up just 4% this year, accounts for a bigger part of that index.

The 30-stock Dow gained 0.5%, or 66.5 points, to 14,578.54, another record. In 2013's initial three months, the Dow jumped 11.25%, the best first-quarter showing in 15 years. The S&P 500 rose 12 points, or 0.8%, to finish at an all-time high of 1569.19, eclipsing the previous pinnacle of 1565 reached 5½ years ago. For the quarter, the S&P was up 10%. The Nasdaq Composite rose 22.5 points, or 0.7%, last week to 3267.52, a 52-week high. U.S. trading ended Thursday in observance of Good Friday.

Record-breaking times call for nostalgic comparisons, but we'll try to be unsentimental. For all the investor excitement, there's actually less economic depth to back up the new high than was the case in late 2007. Back then, the global economy was humming; American unemployment was below 5%; the housing market was peaking, and investor sentiment was positive and strong. Today, the global macroeconomic environment, though improving, remains shaky and fragile.

"The market feels different compared to then," says Kenneth Polcari, director of NYSE floor operations for O'Neil Securities. "People don't feel as euphoric as the market is telling you they should be." And he contends: "The only reason we're here" is the Federal Reserve-induced global monetary easing policy. Still, he says, it's difficult to be bearish in the face of the artificial stimulation created by the world's central banks. "Once they pull back, and interest rates move higher, unless the economy is pumping on all cylinders the housing market will stall again," and stocks will follow, adds Polcari, who figures the punch bowl won't be removed until 2014.

In some ways, however, the differences between then and now reflect more positively on the new high. That the market managed to get here despite a hesitant economic environment has to impress.

The important distinction now, says Michael Mullaney, chief investment officer of Fiduciary Trust, is valuation. In 2007, the S&P 500's price-to-earnings ratio was in the 20s. Today, the forward and trailing P/E ratios are 14.5 and 15.5 times, respectively, still lower than the long-term averages, though no longer exactly cheap.

Corporate earnings are good, and investor sentiment is improving. The question, Mullaney adds, that investors face and whose answer will likely sustain this new bull market is: "Where else are you going to put your dough?" Treasury bonds are in a bubble. On a relative basis, the U.S. stock market is among the more attractive global investment classes around.

The first quarter's torrid rise is likely unsustainable. With the Fed's hand squarely on the throttle, investors will be closely parsing soon-to-be-released earnings results.

MA plans are insurance company-administered versions of the government fee-for-service Medicare plan. The former typically offer lower expenses and more benefits, but a smaller network of health-care providers.

At Thursday's close of $69.11, Humana shares are down more than 10% since Feb. 15, when the CMS, as it's referred to, initially proposed a blended 2.2% cut to what's termed the "growth percentage" of MA benchmark reimbursements. The proposal has a lot of moving parts and is too complicated to get into here.

Humana's stock perked up a bit last week, both on a bullish research report published by Wedbush Securities and on improving sentiment. Thanks to intense industry lobbying, some investors believe the final proposal Monday might be more favorable to health insurers.

This week, Humana's shares could bounce around as the CMS news is picked through, but the decision will deal only with 2014. Meanwhile, the stock has been down for a while now, 28% since hitting a high of $95.50 in January 2012, even as the broad market has climbed 21% over the same period. There's a strong argument that Humana is significantly undervalued and that its price already discounts potential damage from the initial proposal.

The CMS decision is "a short-term milestone," says Jean Francois Comte, co-president of Lutetia Capital, which owns a stake in Humana. At around $70, the market is "clearly pricing in the worst-case scenario," he says.

Wedbush analyst Sarah James noted in her report last week that Humana has a long-term tailwind behind it. Currently, about 25% of Medicare consumers opt for MA plans, she says. But Wedbush's surveys of consumers suggest that the figure could rise to as much as 50% by 2020. Mid-teens percentage volume growth in MA plans would more than offset potential margin compression, adds the analyst.

More immediately, Comte believes that Monday's proposal will be more industry-friendly than some expect, but even if unchanged, "once the market has digested the news, it will refocus on the fundamentals of the business." He calls Humana "my favorite idea in the sector," with consecutive annual revenue growth over the past 10 years and an average 14% return on capital over the past five.

The Louisville-based company, which sports an $11 billion stock-market value, has a pretty good track record in a notoriously difficult and heavily regulated business. Its health plans have shown good membership growth, Comte adds. At the end of 2012, they covered almost 21 million people, about 15% above the 18.2 million in 2008.

Net income has grown strongly, though less steadily than sales. However, Humana's earnings before interest, taxes, depreciation, and amortization (Ebitda) margin has risen nicely, to the 6%-7% range in the past five years, compared with 4%-5% in the five previous ones. The health insurer has a strong balance sheet, with $2.6 billion in debt and $8.8 billion in shareholder equity.

Humana's valuation is now significantly below its long-term historical level. The stock trades at 9.2 times the trailing earnings per share of $7.47, compared with a median P/E of almost 15 times.

The bearish view also doesn't seem to consider that the historically well-run Humana can adapt to changes. Says Comte: The company's track record will be recognized once the smoke from the CMS decision clears. The shares could be worth $90, longer-term, he adds.

Given BAM's success in such moves previously, investors might want to look closer at both it and BPY. BAM has spawned a number of stocks that have done well, says Andrew Boord, a portfolio manager at Fenimore Asset Management, a BAM shareholder. For example, shares of
Brookfield Infrastructure PartnersBIP -1.875293014533521%Brookfield Infrastructure Partners L.P.U.S.: NYSEUSD41.86
-0.8-1.875293014533521%
/Date(1438376522068-0500)/
Volume (Delayed 15m)
:
413729AFTER HOURSUSD41.84
-0.02-0.047778308647873864%
Volume (Delayed 15m)
:
4835
P/E Ratio
29.853088004564256Market Cap
6794882953.68897
Dividend Yield
5.06450071667463% Rev. per Employee
N/AMore quote details and news »BIPinYour ValueYour ChangeShort position
(BIP), in which BAM owns 28%, have doubled since they began trading in 2008, while the market is up 10% in the same period. BAM owns 68% of
Brookfield Renewable Energy Partners
(BRPFF), whose stock is up 260% since early 2001, compared with the market's 31%.

BAM's own stock has risen more than 500%, compared with the market's 42%, over the past 15 years. "It's a complicated company, and the BPY spinoff should make it easier to understand," adds Boord.

BAM is a "unique real-asset manager that adheres to a strict value discipline in cobbling together assets for long-term holding," says another fan, Pat Dorsey, president of Sanibel Captiva Investment Advisers, which owns BAM shares. Its management gets a lot of points for transparency and business acumen, he adds.

Cash flows come from tolls and rents, as well as management fees. A typical BAM investment is to get an equity partner to invest in a toll road, which will then be managed by BAM for a fee.

BPY already trades on a when-issued basis, closing at $21.35 last week. On April 15, BAM plans to distribute 7.5% of BPY to BAM shareholders of record March 26 in the form of a tax-free special dividend of one BPY unit for each 17.42 BAM shares held. BPY is initially pursuing a distribution growth-rate target of 3% to 5% annually and expects to pay $1 per unit annually, for a yield of 4.7%.

According to a report from Spin Off Research, BPY should benefit from a recovering U.S. economy, and further expansion into Brazil and Europe will drive growth. It values BPY at $30 a share, giving BPY a higher than median peer group valuation because of its considerable size and attractive payout targets.

As for BAM, as its business model moves closer to that of an asset-management company, less capital-intensive and with more income from fees, it should get a higher valuation as well, says Spin Off Research, which values BAM at $41.50, 14% higher than its close Thursday of $36.49.

When BPY begins trading, some current BAM holders won't be able to keep their BPY shares for nonfundamental reasons, so investors might wait to see at least a few days of BPY trading before wading in.